Why do sales forecasts slip?

Dealing with sales forecasts that slip is a major challenge for sales leaders to manage. In a Quarterly Business Review (QBR) we hear one or more reasons why a forecasted deal had slipped. You may have been that salesperson or a leader having to fathom out what exactly went wrong.

There will be many reasons to explain why some reasons are justifiable others are not. One undeniable fact remains, the sale forecast was inaccurate. From the outset let us remove two scenarios.

1. Maintaining an unrealistic close date due to pressure from management.
2. Setting an unrealistic close date due to having too few deals in the sales person’s pipeline.

Good sales leadership and sales qualification discipline should manage these situations.

I have a good relationship with the decision maker…

We will focus on those opportunities you consider are well qualified. Relationships are in place with those involved in the procurement process. Also, those affected by the problem and hurt the forecasted solution is addressing.

There is a budget, compelling event, and strong intention to act…

In fact, all the bases required for effective sales qualification are in place. Everyone agrees this is a good opportunity that the business is well positioned to win. But the forecasted close date passes and the opportunity slips.

Could the deal have been more accurately forecasted?

The salesperson has had meaningful conversations. You conclude the information received must have been incomplete or inaccurate. Did the audience or salesperson not listened to the information given? Did the salesperson not asked the right questions? These and other reasons could have been the cause for the forecasted deal to slip.

The business has implemented a systematic sales qualification process. This guides the sales team how to develop their sale and what questions to ask. What we need to know is what did they miss that could have prevented the deal from slipping.

Did the audience value the conversation and information shared?

Who are you referring to when you say you have had a meaningful conversation? Majority of us will be referring to ourselves having had meaningful conversations. Has your audience had a meaningful conversation with you? This can be the reason for a deal to slip.

What is a meaningful conversation in the context of a sales forecast?

A meaningful conversation can be best described as:

“The reality your audience constructs from information received. The meaning they give this information assisting you to maximise your own outcome.”

To better understand this definition, we need to break it down into two parts.

1. Your audience constructing their own reality and giving it meaning.
2. How you use their meaning to maximise your own outcome.

Neuroscience can help us unravel the secrets to having a meaningful conversation.

How does your audience receive information you are communicating? Our physiology is how we present, hold and use our bodies when communicating. There is a reference to 55% of the information we communicate is through our physiology. 38% of how we use our voice and only 7% relates to the words we use.

Many people believe the meaning we give the information we communicate influence behaviour. There is an increasing number of neuroscientists challenging this view. They say it is not the meaning we give to what we are communicating. It is the meaning our audience gives to it that influences their behaviour.

Talk with three people, they will each give a different meaning to what you are communicating. There is also the meaning you are giving your message. We now have four meanings associated with the one message you are communicating.

How do people give meaning to the messages they receive?

We need to step into the mind of our audience. This means stepping into their brain to better understand what is going on.

Lisa Feldman Barrett has written an excellent book called ‘How emotions are made, the secret life of the brain’. Barrett explains that your brain is wired for speed. It receives millions of sensory inputs every moment of your waking life. It cannot process everything received at the speed required to keep you safe. To compensate it performs continuous predictions and simulations. It tests these predictions comparing them to incoming sensory inputs from the world. These could be a feeling within your body or from the outside world. Your brain treats all inputs with equal importance. It acts like a scientist comparing a hypothesis against data in an experiment. If it is predicting well, the sensory inputs confirm your prediction is correct. It then takes this prediction as your reality.

For many, this next statement comes as a surprise. Your audience is constructing their reality using the information you are communicating. Next, it tests this knowledge against the meaning they give to your information. This allows their brain to estimate how confident it is their prediction is correct.

How can you use these insights to build a more accurate sales forecast?

First, understand your audiences’ situation by preparing and asking the right questions. Adapt your sales pitch or message to influence their behaviour. You adapt your message to achieve your priority outcome. There is one final piece in the puzzle. What information in your message is being used to construct their reality?

Like a scientist, your audiences’ brains will have some options. Consider these five behaviour styles:

1. Responsible and change their predictions to respond to the data received.
2. Biased and selects which data best fits their hypothesis, ignoring everything else.
3. Unscrupulous and ignore the data altogether, maintaining their predictions are the reality.
4. Curious and focus on inputs to learn and discover.
5. Dreamer and imagine their world. This is pure simulation without any sensory input or prediction error.

You will recognise one or more of these behaviour styles within your contacts. To be effective qualifying a contact you need to understand their situation. Check what they want supports the business need you are addressing. Check the business need is a priority with those with authority. Everyone can say “No”. Do they have the authority to say “Yes!”. Check what is their dominant behaviour style. Adapt how you communicate, and frame your questions based on their behaviour style. Do this and you will influence the meaning they are giving to the information you are sharing.

Ignore this guidance and you risk adopting the meaning you are giving to the information shared. This is the reason so many forecasted sales opportunities slip.

Pulling it all together…

Accurate sales forecasts rely on a systematic sales qualification process. Both the company opportunity lead and each contact lead must be well qualified. Step into and understand your audiences’ world. Predict their behaviour with the information you share. Better understand what meaning they give to your conversation. Follow this guidance and you will build and maintain a more accurate sales forecast.